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HMRC internal manual

Appeals reviews and tribunals guidance

HM Revenue & Customs
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First-tier and Upper Tribunals: The tribunal hearing: Tribunals right to award costs - First-tier Tribunal

Where a case is to be litigated at the First-tier Tribunal, each party generally pays their own costs, except in the following circumstances:

Complex cases

The First-tier Tribunal may award costs (in Scotland, expenses) to the winning party in cases allocated to the Complex category, see ARTG8350, unless the customer has written to the tribunal within 28 days of the notice of the case category, to say that they wanted the proceedings excluded from potential liability for costs (known as ‘opting out’ of costs). The tribunal may make a costs order on an application or on its own initiative.

Unreasonable or wasted costs

The First-tier Tribunal can also award costs (regardless of the case category)

  • if it thinks that either the customer or HMRC or their representative acted unreasonably in bringing, defending or conducting the proceedings – this would usually be a one-off event, such as a party forgetting to attend a tribunal hearing causing the hearing not to proceed resulting in waste of the tribunal’s and the other party’s time
  • in relation to s29(4) TCEA 2007 (wasted costs) – awarded if the tribunal decides that a party or their representative has acted unreasonably in bringing, defending or conducting proceedings, for example unnecessary delay, failure to comply with Directions and misrepresentation. These costs are usually awarded when a party has continually acted unreasonably, that is a series of events.

Applications for costs

In cases where costs may be awarded, a person may apply for costs by writing to the tribunal and to the person against whom they are applying for the costs order to be made. The application should include a schedule of costs claimed. The tribunal may award costs of, and incidental to all proceedings in the First-tier Tribunal. It does not include any costs associated with an enquiry that gave rise to the decision under appeal. However, the customer may seek compensation for those costs under HMRC’s complaints procedure, see CRG5475 and CRG5500.

They can apply at any time during the proceedings but no later than 28 days after the date of

  • the tribunal’s notice of decision, or
  • any notice of withdrawal which finally disposes of all issues in the proceedings.

The tribunal cannot make an order relating to costs against either the customer or HMRC

  • without taking into account their means (if an individual), and
  • giving them an opportunity to make representations.

Where customers or their representatives have acted in a way that is clearly and objectively unreasonable HMRC will consider making an application for costs. If the tribunals caseworker thinks that costs would be appropriate in any case they should discuss the case with their manager and the Costs Liaison Manager in their Appeals Unit in the first instance.

If the Costs Liaison Manager agrees that HMRC should apply for costs, the tribunal’s caseworker should prepare a schedule of costs to send to the tribunal with the application. The Costs Liaison Manager, or the Costs Team in Solicitor’s Office (see below) will provide advice to tribunal’s caseworkers on preparing the schedule of costs.

Amount of costs

The amount of costs to be paid can be arrived at

  1. by decision by the tribunal
  2. by agreement between the paying and receiving persons
  3. by consideration of all or part of the costs incurred by the receiving person, if not agreed.

The costs claimed must be reasonable and proportionate, and clearly have been incurred in the conduct of the appeal and not for some alternative or broader purpose.

Where there has been an assessment of the amount of costs to be paid as set out in 3 above, either the paying or receiving person can apply to

  • the county court, the High Court or the Costs Office of the Supreme Court (in England and Wales) for a detailed assessment of costs
  • the Auditor of the Sheriff Court or Court of Session (in Scotland)
  • the Taxing Office of the High Court of Northern Ireland.

Role of Costs Team in Solicitor’s Office

The Costs Team in Solicitor’s Office provide advice on claims so that the tribunal’s caseworker may negotiate an agreed amount of costs. They will also provide advice in challenging claims before the tribunal or, in some cases, take over a claim from the tribunals caseworker. This usually happens where both parties accept that the party is entitled to costs, but the amount is sufficiently large for the negotiations to be complicated or lengthy or are to be assessed by way of detailed assessment. Where the tribunal’s caseworker considers that the costs are likely to require advice from Solicitor’s Office Costs Team they should contact the Costs Liaison Manager within their Appeals Units in the first instance.